Big blues at IBM India

BANGALORE — In one of the largest-ever lay-off drive among global technology companies, IBM is said to have started cutting jobs globally on Wednesday, with first casualties in India.

Wral TechWire, a tech-related website, quoted IBM staffers in Bangalore as saying that “people broke down after seeing the inhuman treatment. Laptops along with the cases were confiscated, so several employees were seen crying and exiting building carrying and balancing their personal belongings with their two hands.” Unofficial estimates put the sacking number at around 1,000 in Bangalore alone.

Poor fourth-quarter results reported last month, marked by a 26 percent slump in hardware revenue, is suspected to be the main cause of layoffs. Worldwide, IBM employs 430,000 people and reports say some 13,000 jobs are likely to be cut as the tech major performs a “global rebalancing” act, termed “resource action” or RA, that could save about $1 billion in costs.

Bloodbath at STG Bangalore
Already, at one centre in Bangalore, IBM has asked about 40 people at its Systems Technology Group (STG) to leave, one person at the company told The Economic Times (ET). STG is often referred to as IBM's hardware division, according to the company's website.

According to the report, a person in Bangalore said on condition of anonymity that they were asked to surrender their official laptops and leave. “They were told STG business has been suffering financial woes. Employees across IBM India are extremely disgruntled. Several middle level executives have put in their papers in the last few weeks," the person added.

"STG Bangalore literally turned into a slaughter house today," Lee Conrad, national coordinator for Alliance@IBM, a union-backed workers group to The Economic Times in an email. "Several employees were called to a meeting and RA'd... and they were asked to vacate premises immediately. Severance package was on an average three months basic component of salary, which is like six weeks full pay," Conrad said.

RA refers to 'resource action' that IBM's managers at various units were asked to prepare for, ahead of the job cuts, according to media reports in the US. "People broke down after seeing the inhuman treatment. Laptops along with the cases were confiscated, so several employees were seen crying and exiting building carrying and balancing their personal belongings with their two hands," according to the email.

According to the union, job cuts in the Systems and Technology Group are happening because of a drop in profits and IBM's drive for $20 (Rs 1,240) earnings per share. IBM has set itself this earnings target by 2015, but analysts have questioned if this is achievable, especially after the company's latest results.

Although IBM has not confirmed the layoffs sources confirmed that hundreds of IBM staffers at its Bangalore office were asked to leave suddenly. Some of them, it is said, were given just a couple of hours notice and asked to leave behind their laptops and vacate the premises pronto, said the DNA newspaper.

IBM’s poor results lead to lay-offs
Last month IBM had agreed to sell its low-end server business for $2.3 billion to Lenovo, which had already bought company's PC business. At STG, "even people with very high rating were asked to leave. Two weeks ago they were told there would be no salary hikes this year,” the report added.

IBM reported a 5 percent drop in revenue in the December quarter versus the year-earlier period and analysts attribute a slightly higher-than-expected earnings per share for the quarter to measures including share buybacks and not growth in business. "We are hearing up to 15,000 cuts worldwide in the first quarter. We expect job cuts in the US February 26." Conrad said.

In India, IBM has a head count of over 130,000, its largest presence outside the US.

Chief financial officer Martin Schroeter told analysts in a conference call last month after the company reported its fourth quarterly decline in sales that the hardware business, which sells mainframes, servers, storage and related gear, was facing difficulties and would see job cuts.

Currently the talk among recruitment experts is that IBM may be targeting up to 2,000 job cuts in India though nobody is confirming this figure yet.

Anyways, Indian are lazy bunch atleast in India. The management in India is only puppet and do what their masters in west tell them to do. The risk taking capability and general appetite for innovation is very low.

Several years ago when I tried to hire 2 technical experts in Japan for the Japanese Labs of our 20 year old Silicon Valley company, both REFUSED on grounds that the values of US Companies are NOT compatible with Japanese culture. This, even though one of the two was at that time unemployed ! Perhaps it will take Indians a while to develop the same level of confidence in their own culture & worth, having been colonized by the UK for a long time.

@susan:rambo: Labor laws in India are antiquated. They were drafted in the early 1900s and nothing has changed till now. All the governments which come and go talk about changing the labor laws but nothing has ever changed. Maybe a few more decades to go and then perhaps we might see some changeor maybe not.

@_hm: Nobody said Indian employees dont move from one company to another.. wouldnt you or anyone else move if the work is appealing to them or the compensation more attractive? When they get into larger companies, say like TI or Intel or IBM or Indian companies like TCS, Infosys or Wipro, they do not think of moving immediately I guess. It is more like a comfort zone. I got a few friends in Wipro and they have been there for years and the issue they have is there is nowhere else to go with their skillsets and they are well looked after too.

I am just a reporter - I merely report whats going on.

Personally I know downsizing has to happen - not just in private sector but also in the public sector in India but there is a way to go about it. And, I am sure they will get jobs somewhere else but it still is a shocker to them. There was a comment earlier about call coming through and the employee is told to leave.. that is even more sad... whether it is in America or EU or Australia it is a sad thing that when the companies ask their employees to leave rather than the employee giving notice and leaving. I dont think anyone here just quits without prior notice except perhaps our car drivers who are known for jumping from one job to another.

@wave.forest: Yes, even 30 years ago IBM faced a similar problem when they shifted from mainframe to PC and am sure they find another domain to latch on to and bounce back. And, the Indian workforce too is resilient and will bounce back - it is just a matter of time. Lay-offs are not that many in India, or rather they were not too many.

Hello @stippu. Yes, I understand the mentality of working hard and expecting the company to take care of you. I was one of those before I was laid off too. The US used to have the same mentality of working for your entire career at one company. This has only changed in the past generation. I guess it is also changing in India as well as the rest of the world.